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Glencore

Glasenberg renews call for lossmakers to shut – by David McKay (MiningMX.com – December 10, 2015)

http://www.miningmx.com/

GLENCORE CEO, Ivan Glasenberg, returned to a favourite theme in questions during the firm’s investor update today saying he “… did not understand” why rival miners kept loss-making assets open.

He also raised the prospect that his company would “walk away” from its 49% stake in the Koniambo nickel mine in New Caledonia.

“We inherited the asset [Koniambo] and we have struggled with it since,” said Glasenberg of the nickel operation that was first established by Xstrata, the company with which Glencore merged in 2013.

“But we are not married to it. If the furnace does not work we will walk away from it. We will not burn cash. This is not Glencore’s style and we won’t do it,” he said.

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Nickel’s hiatus may be brief without output cuts, stronger demand – by Pratima Desai (Reuters U.S. – November 27, 2015)

http://www.reuters.com/

LONDON, Nov 27 Nickel’s spectacular fall since the middle of last year may have come to a halt, but without significant, enduring output cuts and stronger demand from China’s stainless steel mills the reprieve could be brief.

Benchmark nickel on the London Metal Exchange fell to $8,145 a tonne earlier this week, less than half the level seen in May last year and its lowest since the middle of 2003.

Funds reversing their bets on lower prices on the expectation that Chinese producers may cut output since then pushed prices back up to near $9,000 a tonne.

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Glencore’s cuts come back to bite zinc bears – by Andy Home (Reuters U.S. – November 20, 2015)

http://www.reuters.com/

Nov 20 The London zinc price touched a fresh six-year low of $1,497.50 per tonne on Thursday.

Last month’s flurry of excitement after Glencore’s announcement of 500,000 tonnes of mine cuts had, it seemed, completely dissipated.

But those cuts were carefully calibrated to get maximum impact out of the supply chain and the tremors are starting to be felt, judging by this morning’s announcement of major production cuts by Chinese zinc smelters.

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Rio Director Copper Bullishness Sparked by Cisco Boffin’s Remark – by David Stringer and James Paton (Bloomberg News – November 17, 2015)

http://www.bloomberg.com/

An engineer at Cisco Systems Inc. once told Rio Tinto Group director Megan Clark that electrons travel faster through copper than the air. That observation helps explain why she’s bullish on the red metal.

“It’s not going to be substituted any time soon — it’s still one of our best materials,” Clark, also a former chief executive officer of Australia’s Commonwealth Scientific and Industrial Research Organization, said Wednesday at the Bloomberg Summit in Sydney. “I like copper from every which way I look at it over the next 10 years.’’

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Copper price recovery at least three years off, says BHP Billiton – by Amanda Saunders (Australian Financial Review – November 18, 2015)

http://www.afr.com/

BHP Billiton does not expect depressed copper prices to lift for at least the next three years, but is confident in a comeback around 2019, when the market should start to shift into a “total under-supply situation”.

Copper prices have been languishing around six-year lows for much of this year, smashing Glencore’s share price and also putting pressure on copper majors BHP and Rio Tinto. Overnight on Tuesday, the price of copper – which is seen as a proxy for global economic activity – sank to a fresh six-year low of $US4590 a tonne.

Prices for BHP’s four key “pillar” commodities – copper, oil, iron ore and metallurgical coal – have taken a beating in 2015.

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Glencore’s renewed slide pressures Glasenberg debt-cut plans – by Jesse Riseborough (Bloomberg News – November 18, 2015)

http://www.bloomberg.com/

If all else remains unchanged, it’s going to be back to the drawing board – analyst.

For a while it looked like Glencore had turned the tide.

Billionaire chief executive officer Ivan Glasenberg’s $10 billion debt-cutting plan, vivified with asset sales and output cuts, breathed life into a collapsing share price. Now with the stock falling again, pressure is back on to drive those efforts harder and faster.

The Swiss firm has fallen for the past 10 days straight in London, the longest streak on record. That 31% slump, as prices for the copper and zinc that Glencore produces reached six-year lows, wiped about $8 billion off the mining and trading company’s value.

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Copper price slump could create headwinds for Glencore’s debt plan – by Olivia Kumwenda-Mtambo and Atul Prakash (Reuters U.S. – November 17, 2015)

http://www.reuters.com/

JOHANNESBURG/LONDON – Further falls in copper prices might yet undermine the fightback mounted by mining and trading company Glencore after its shares tumbled to record lows this year, analysts said.

London Metal Exchange benchmark copper plunged to $4,590 a tonne on Tuesday, its lowest in more than six years, as fears about slowing demand growth in top consumer China and a higher dollar fueled negative sentiment.

Glencore saw its shares hit a record low at 66.67 pence in September over concerns it was not doing enough to cut its debt to withstand a prolonged fall in copper – its key metal.

Swiss-based Glencore has pledged to cut its net debt from nearly $30 billion to $20 billion by the end of 2016, a plan the company said would allow it withstand copper prices of $4,000 a tonne, as expected by some market players.

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Silver Wheaton pays Glencore for silver rights at Peru mine – by Ian McGugan (Globe and Mail – November 3, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Silver Wheaton Corp. of Vancouver is paying $900-million (U.S.) to embattled Glencore PLC in exchange for rights to some of the future silver production from a Peruvian mine.

The deal highlights the increasing willingness of major miners to swap tomorrow’s production in exchange for cash today.

Companies like Silver Wheaton provide upfront payments to miners in return for the rights to buy “streams” of their future output at below-market prices. Streaming companies have found ample opportunities in recent years as metals prices have slumped and commodity producers have encountered problems in raising money from traditional sources.

The deal will come as welcome news to Glencore investors, who have seen shares of the commodity trader lose more than half their value this year.

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Other zinc miners fail to follow Glencore output cuts; price slides – by Eric Onstad (Reuters U.K. – November 3, 2015)

http://uk.reuters.com/

LONDON, Nov 3 (Reuters) – Prices of zinc and lead have given up nearly all their gains since Glencore shocked the market with output cuts, as investors realised other producers were happy to fill the supply gap.

That means the market is unlikely to see shortages of zinc and the price rally next year that many bulls had hoped for.

The latest set-back in zinc prices follows disappointment this year as the well-flagged closures of big mines that had run out of ore failed to create shortages as expected amid large inventories.

The benchmark zinc price on the London Metal Exchange (LME) surged 13 percent over two days in the aftermath of Glencore’s announcements on slashing output.

Commodity trader and producer Glencore, the world’s largest miner of zinc ore, said on Oct. 9 it would cut 500,000 tonnes of its zinc production or 4 percent of global supply to help support prices.

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Glencore to Invest $950 Million Upgrading Zambia Copper Mine – by Andy Hoffman and Matthew Hill (Bloomberg News – October 29, 2015)

http://www.bloomberg.com/

Glencore Plc plans to invest $950 million over three years to expand operations at its Mopani Copper Mines as part of a plan to refurbish assets and lower production costs in Zambia.

The Swiss mining company last month announced it’s halting production for 18 months in Zambia, Africa’s second-largest copper producer, in response to a drop in prices for the red metal.

“We continue to employ over 10,000 people at Mopani, and will be investing $950 million in site expansions and upgrades to extend the life of mine,” Baar, Switzerland-based Glencore said Wednesday in an e-mailed response to questions.

Copper production costs at Mopani, the previously state-owned mines in which Glencore purchased a majority stake in 2000, are more than $2.50 a pound. Glencore has said the upgrade will reduce the operation’s costs to $1.70 per pound, below the current spot price of about $2.34 a pound.

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[Glencore hype?] News versus noise – by Michael McCarthy (Switzer Daily – October 29, 2015)

http://switzer.com.au/

A challenge for investors is separating potentially market changing news from the “noise” generated by twenty-four hour trading and the voracious and sensationalist media cycle. Much of the “information” spewed at investors is not only unhelpful, it can be damaging. Wise investors take arms against a sea of media troubles.

Some of the ways the news cycle can hurt investors:

Sometimes, the news is just wrong

A recent example was the description of the situation at global commodity house Glencore. A theoretical view that if current commodity prices were maintained in perpetuity, Glencore could face funding issues over the long term somehow became “Glencore is going broke”. In a perfect illustration of hyperbolic excess, a number of outlets ran with “the commodity markets Lehman Brothers moment”.

Anyone making that comparison with a straight face displayed gross ignorance. Glencore’s balance sheet and funding facilities are public knowledge. A bare minimum of journalistic digging could have turned up the facts in minutes.

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Glencore shrinking its $18 bln commodity inventory mountain – by Sarah McFarlane and Dmitry Zhdannikov (Reuter U.S. – October 29, 2015)

http://www.reuters.com/

LONDON – Oct 29 Commodities mining and trading giant Glencore is reducing its $18 billion inventory pile, industry sources say, a move ratings agencies say could help assuage concerns about its balance sheet.

The biggest player in the secretive commodities trading industry to hold a public share listing that requires it to disclose its accounts, Glencore has been battered by the global downturn in commodities prices.

Worries about its $30 billion debt burden saw its share price lose nearly two thirds if its value so far this year. The firm has pledged to reduce its debt by $10 billion by suspending dividends, reducing investments and selling some assets in order to protect its investment grade debt rating.

Sources close to the company say it is also reducing its vast trading inventory, driven in part by the winding up of “contango” market conditions, under which long-dated futures contracts were priced higher than spot prices, encouraging traders to store material to resell it at a profit later.

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Big miners kick the empire building habit – by James Wilson (Financial Times – October 26, 2015)

http://www.ft.com/

BHP Billiton and Rio Tinto are being forced to curb their spending amid China’s economic slowdown

When the chief executive of one of the world’s biggest mining groups had to find words to describe his industry’s litany of problems, he turned to a US country song with an apt title: If You Are Going Through Hell.

“If you’re goin’ through hell keep on going,” were the lyrics recited by Freeport-McMoRan’s Richard Adkerson at a London reception this month, as his Arizona-based company battles a plummeting copper price and burdensome debts. “Don’t slow down, if you’re scared don’t show it . . . you might get out before the devil even knows you’re there.”

Forget the devil: mining investors are only too aware that the sector is a long way from paradise. The industry’s fortunes have deteriorated significantly since the end of the commodities “supercycle” — a big upward shift in demand driven by China’s post-2000 emergence as a manufacturing superpower.

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Ivan Glasenberg faces major test amid Glencore’s shaky future – by Eric Reguly (Globe and Mail – October 24, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

LONDON — The partners at mining and commodities trading giant Glencore PLC earned a fortune buying into the “stronger for longer” China story. That bet has been looking shaky for a couple of years and downright precarious since January, when copper – Glencore’s most important commodity – went into the tank and stayed there.

In early January, copper futures plunged almost $1,000 (U.S.) a tonne, to $5,400, taking them to their lowest level in more than five years. Glencore’s shares tripped into the sinkhole with them. Since then, copper prices have lost another 5 per cent or so, a bewildering scenario for Glencore’s normally unflappable traders and executives.

“It’s just not making sense,” Glencore chief executive officer Ivan Glasenberg told analysts on the company’s earnings call on Aug. 19. “We’ve never seen copper inventories down at these levels and prices, because, [at] these levels, you normally have a much higher copper price.”

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Nickel Rim miners return to work today – by Jim Moodie (Sudbury Star – October 23, 2015)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

It will be with heavy hearts and no doubt an eerie sense of their own vulnerability that miners return to work at Glencore’s Nickel Rim South facility near Skead tomorrow. Operations were scheduled to resume Friday, according to a Reuters report, after being shut down Tuesday due to the underground fatality of employee Richard Pigeau.

The worker, 54, was killed when he was struck by a piece of equipment, the Ministry of Labour reported. According to CBC, the accident occurred 5,000 feet below the surface.

Little else is known, however, about the circumstances of the tragedy, pending the outcome of a Ministry of Labour investigation and a separate probe that will be carried out jointly between Mine Mill 598/Unifor and the employer.

No funeral arrangements had been made publicly available by Thursday and the family of the late miner were asking that their privacy be respected in this difficult time. 

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